It no longer takes an industry pioneer to say that SaaS is an up and coming way of delivering software service. The Internet is not yet ubiquitous and there are still many industries where the “enterprise” way of software delivery is still both a legacy standard and a current business need. However software vendors beginning to realize advantages of SaaS are investing resources to build (or buy) and deliver it.

Judging on the news coverage, many players are trying to SaaS-enable their application. Recent announcements include other launches of SaaS platforms as well, built from the ground up (Salesforce, Netsuite, etc.). SaaS enabled products from companies like Informatica, SAP, and Plexus Online (manufacturing performance) all lead to more industry awareness on the part of the consumer – North American business. Microsoft too looks like it will be jumping on a bandwagon with Windows Live.

A well-covered report by Gartner’s Robert DeSisto indicates that SaaS coverage in the software industry is now 5%, and is expected to grow to 25% by 2011.

For more good news check out the podcasts from the SaaSCon.

Blogosphere offers some of the most active commentaries on the SAAS evolution. Phil Wainewright’s blog features helpful and informative commentaries almost daily. Check out some of the other ones from Eric Norlin, Gianpaolo Carraro, Fred Chong, Charles Zedlewski, Amy Wahl, Tim Minahan, and Dan Ciruli. This list far from complete, look for more in the upcoming posts. Please let us know if you would like to recommend anyone else.

So these are some of the powerful indicators of where the SaaS model is headed. Here is our perspective on why SaaS is here to stay.

When a company licenses their own time and labor management solution, these are some of the challenges it has to deal with:

1. Licensed software typically needs to be installed on every computer that will be used by employees, managers & decision makers, even if only a thin-client, the software needs to be managed. The software typically cannot be used by anyone who does not have it installed: on the road, in the field, etc
2. Software license purchases usually require large upfront cash expenditure plus a recurring maintenance fee from the vendor company. As soon the cash exchanges hands, a shift of responsibility from vendor to customer generally takes place that is not optimal for software rollout – being the vendor is usually the expert!
3. The company needs dedicate support and maintenance personnel – whether to troubleshoot or install updates.
4. Speaking of updates, a) the company may have to pay for some of them if the latest and the greatest features are required or b) if there is an emergency update, how would the necessary patch be rolled out?
5. The company typically needs to purchase hardware to host the data – translating into additional hardware, software, and personnel cost.
6. As company grows, additional licenses may have to be purchased and maintenance cost may increase. When company downsizes – the costs do not necessarily go down.

One of the reasons why SaaS is touted everywhere is that it offers economies of scale unattainable by a single company. Our upcoming postings will expand on this and discuss other topics. Your comments are always welcome.